“Probably to get even with them for turning him into the Norwegian taxing authority,” Robert said.
“No.”
“Maybe because Coco believed the company’s assets were undervalued relative to other investments,” Robert said.
“Some people believe it was because the heir to Knut Shipping, Knut the Fifth, teased Coco because his parents couldn’t afford to buy him a decent pair of boots when they were schoolboys in Bergen; Coco wore sneakers all winter. Apparently that’s why Coco dropped out of school and went to work for Hilmar Reksten. He wanted to learn the shipping business so he could beat Knut at his own game.”
“That’s crazy,” Robert laughed.
“Other people believe your employer is a modern-day Viking who is now attacking companies in the countries that have attacked Norway over the last 2,000 years – just to get even.”
“That seems a bit far-fetched,” Robert said.
“Does it?” Mr. Juhl said. “Did you know that Coco Jacobsen is singlehandedly responsible for the extinction of Swedish tanker shipping? That is a fate that I do not want the Danish people to suffer.”
“But Mr. Juhl, if you think Coco is your sworn enemy and you think I am his mastermind, then why did you invite me up to your office?” Robert asked. “Why didn’t you allow Ida to press the panic button and send me to a Danish jail for the rest of my life?”
“Because I have grown more curious and less disciplined in my old age, Mr. Fairchild,” he said. “And now I am interested in knowing exactly how you and Coco are planning to victimize an old man like me.”
“I don’t want to victimize you,” Robert said. “I want to make you rich.”
“I am already rich,” he said plainly. “My family’s main objective now is just to keep things the same. That is the guiding principle behind every decision we make: the preservation of the status quo.”
That sounds exciting, Robert thought.
“Mr. Juhl, you’ve been direct with me so I’ll be direct with you,” Robert said. “I am here to make you an all-cash offer on the fleet of fifteen LNG carriers you are currently building at Regal Shipyard in Korea.” As Robert spoke, he watched the old man’s eyes widen theatrically.
“You do know those are brand new vessels,” Mr. Juhl said.
“Yes,” Robert confirmed.
“But I should think these would be the last vessels in the world a man like Coco would want to buy,” Mr. Juhl said.
“Why?”
“Because I thought he could only afford the old vessels like the ones he bought from me.”
“Which vessels were those?” Robert asked.
“A few years ago I placed an order with my old friends at Regal Shipbuilding to build twenty new VLCCs to replace my entire fleet,” he said. “Every time a new ship was delivered I decided to sell an older ship to a scrapyard in Bangladesh. The older ships were not at the end of their life, and could have been sold for more money for further trading, but I sold them to demolition in order to keep the supply and demand of ships in balance.”
“That sounds rational,” Robert said.
“Yes, I thought so, too,” he said, “but then a funny thing happened. After I thought I’d sold the first twelve vessels to the scrapyard I noticed that the ships I thought were dead kept coming back and offering very low rates for cargoes in the Arabian Gulf.”
“That’s surprising,” Robert said.
“So is Mr. Jacobsen,” he said. “As it turned out the scrapyard in Bangladesh wasn’t a scrapyard at all,” he said. “It was Mr. Jacobsen. He used my old ships to compete with my new ships for another ten years!”
“Look Mr. Juhl,” Robert said, “I understand that you and Coco have a history, everyone in the shipping industry seems to have a history, but I am here to make you a very generous offer on your LNG ships,” Robert said.
“There is no such thing as generosity in the shipping business,” Mr. Juhl said. “There is only a rapid re-pricing of risk, which is exactly why the market is so active. By the way, did you know that people ridiculed me when I ordered those LNG carriers?” he said.
“Why?” Robert asked.
“Because they said those vessels cost too much to build, and until recently, they generated very modest financial returns. But ever since the Fukushima incident last year and the discovery of U.S. shale gas everyone in the world now seems to want them.”
“That must have been a pleasant surprise,” Robert said.
“Let me give you some advice, Mr. Fairchild; if you built a good ship at a low cost, as I did with those vessels, then almost every surprise is a pleasant one,” he said. “But if you pay too much for a ship, you will be disappointed until the bitter end.”
“I am here to offer you a very good price on those vessels,” Robert said.
“You should also know, Mr. Fairchild, that you are not the only person in the world who is interested in those particular ships,” Mr. Juhl said and closely studied Robert’s face to gauge his reaction.
“I can believe that,” Robert said.
“In fact, there is another American coming this afternoon to make me an offer on the vessels,” he said. “And she had the decency to make an appointment with Ida.”
“Have you Googled her, too?” Robert asked.
“I sure have,” the old man smiled boyishly and raised his eyebrows.
“Then let’s go have lunch and make our deal,” Robert said, rubbing his hands together. “Let’s do it – shipping style.”
“I am not sure who you have been talking to, but here at Great Dane Shipping everyone eats lunch at their desk,” he said, “including me.”
“Do you want to hear my offer or not?” Robert asked. There was almost nothing more demoralizing than trying to buy something from someone who didn’t need to, or want to, sell it.
“Not really,” he said.
“But you have a duty to your shareholders to explore…”
“I am my shareholders,” he interrupted. “Besides, Mr. Fairchild, I simply cannot sell those vessels to you.”
“But you haven’t even heard my price?” Robert whined.
“It doesn’t matter; I can’t sell them to you Mr. Fairchild because they are gone,” the old Dane confessed as he shook his head back and forth. “They are gone and I will never get them back.”
“What do you mean they’re gone?” Robert pleaded. “I mean I already sold them, to someone else,” he said.
“But why? Why did you sell them?”
“For the same reason anyone sells anything; I had a higher use for the money.”
“What did you do with it?”
“I donated the $750 million profit I made on those vessels to create a cancer hospital in France,” he said. “If I have learned anything during my lifetime it’s that there’s no better value than using money to help people, but you won’t see that on your fancy little calculator!” he said and shot a glance at the HP 12C cradled in Robert’s palm.
Robert had learned during his short time in the industry that if you needed a calculator and a lot of time to analyze a shipping deal, it was probably a bad deal; all the best ones seemed to be done on napkins.
“But you are still listed as the registered owner in Fairplay Solutions,” Robert said. “I just saw that on the internet yesterday!”
“Yes, that’s because technically I am still the owner since we sold the ships to the new owner using the Norwegian Sales Form. In our case, the buyers gave us a sizable deposit when they signed the MOA and they will pay the rest of the money when they vessels start delivering,” Mr. Juhl explained.
“Fine,” Robert said with irritation. “Then can you at least tell me who you sold the ships to, so I can make them an offer?”
Robert was profoundly disappointed that he would not be going home on the SAS flight that evening, but he knew that no good would come from returning to his apartment before he’d made a deal to buy the LNG ships and rescued his IPO and Olive
r’s shares from ruin.
“I’m afraid I have absolutely no idea who the buyer was,” he admitted. “Sorry about that.”
“What do you mean you have no idea?” Robert protested. “That was a multi-billion dollar deal! How can you not know who you sold them to?”
“Because this is shipping, Mr. Fairchild,” he said. “The buyer was a nominee company based in the Marshall Islands that was represented in the negotiations by a shipbroker in London,” he said. “That’s all I know and that’s all I need to know.”
“Then can you at least tell me the name of the Marshall Islands holding company that bought the ships?” Robert begged. “Maybe that will give me some kind of clue as to who the actual owner is.”
“That I can do,” Mr. Juhl said happily and walked over to the wall on the far end of the room that was packed from floor to ceiling with hundreds of three-ring binders containing the key documents associated with individual vessel transactions.
“Thank you,” Robert said.
“LJS Holdings,” he read loud. “The nominee company that bought the fifteen LNG carriers under construction at Regal Shipbuilding is called LJS Holdings.”
“What LJS does that stand for?” Robert asked.
“It stands for Long John Silver,” he said.
“Long John Silver Holdings?” Robert repeated slowly. It was yet another oddly coincidental reference to Treasure Island, his son’s favorite book. Maybe this was a sign from above that it was time to give up and go home tonight, he thought.
“That’s the one,” he said.
“So what am I supposed to do now, call Blackbeard?” Robert blurted out. “I need your help, Mr. Juhl, please,” he begged, “I have a lot at stake here.”
“Everyone always has a lot at stake in this business each and every day,” Cornelius Juhl said. “That’s why it is so intense. The truth is, Mr. Fairchild, there’s only one thing you can do.”
“Give up and get a real job?” Robert asked.
“Oh no, never give up,” he said. “Your only hope is to follow the money back to where it came from.”
“Follow the money back to where – to the Marshall Islands?” Robert choked. “I don’t even know where the Marshall Islands are!”
“They’re located in the South Pacific Ocean and they are absolutely lovely by the way. But no, my recommendation is that you pay a visit to the shipbroker in London that represented LJS Holdings,” he suggested. “Surely he will be able to tell you who his client is.”
“What’s his name?” Robert asked and put pencil to paper.
“Nicholas Eaton-Hardy,” Mr. Juhl said.
“Do you think he’ll be willing to meet me?” Robert asked.
“Shipbrokers are always happy to take a meeting. They are one of the single best resources in the entire shipping industry,” Mr. Juhl said. “They are generous with information, willing to share their knowledge and almost always happy to have a beer.”
“I could use a few of those,” Robert said.
“Then I will phone him right now and let him know you are coming to visit him tomorrow,” Mr. Juhl said.
“Tomorrow?” Robert said as he stood up. “I can’t wait until tomorrow. I need to go to London right now!”
“Well done,” the Great Dane said as he lay down on his couch for his first of two daily naps. “I hope to see you again very soon.”
Chapter 24
The Baltic Exchange
Founded in the mid-1700s in a coffee shop near the Royal Exchange in London, the Baltic Exchange is the world’s only independent source of maritime market information for the trading and settlement of physical and derivative contracts. The 550 members of the exchange are responsible for a large proportion of all dry cargo and tanker fixtures as well as the sale and purchase of merchant vessels.
The black handsome cab inched off the choking traffic and stopped in front of the single most important address in international dry cargo shipping – 38 St. Mary Axe.
After Robert had disembarked from the iconic vehicle he stood on the ancient corner of St. Mary’s Axe and Threadneedle and he savored the thick mist blowing off the nearby River Thames. As he looked at the low ceiling of grey-green clouds, the neoclassical buildings darkened with one-hundred-year-old coal soot and the red phone boxes, he felt as though he’d travelled back in time. To Robert, there was simply no city in the world in which it was easier to imagine life in the nineteenth century.
“Seven days and counting,” he muttered to himself like a lunatic as he pulled open the impossibly heavy door of the church-like structure at 38 St. Mary Axe, the address where Mr. Juhl instructed him to meet Nicholas Eaton-Hardy. “I have just seven days to find out who owns the fifteen LNG ships and get an MOA signed so I can resume the IPO roadshow before it’s too late.” If the IPO wasn’t successful, Robert knew his career in shipping, and Oliver’s 10% of Viking Tankers, would both be gone – forever.
When he entered the building where he was supposed to meet the legendary shipbroker, Robert once again wondered if he was in the wrong place. The stone foyer was dead quiet and based on the bustling chartering desk he had witnessed at Blue Sea Shipping & Trading it just didn’t seem possible that he could be in a global shipbroking house. In fact, his only company in the room was a ghostly old black-and-white photograph from which a group of men in top hats and tails were sternly staring down at him.
“You must be Mr. Fairchild,” a raspy British accent broke the heavy silence. The voice belonged to the man slowly ambling in his direction with the assistance of an intricately carved wooden cane.
Robert had plenty of time to observe the aristocratic and arthritic gentleman making his way toward him – the wisp of his long gray hair, his once towering frame, his ruddy cheeks and an otherwise proud nose slightly crooked to one side. The man looked like Peter O’Toole out for a walk on the Dartmoor: green flannel trousers, a tweed sports coat and a green knit tie all wrapped in a brown Barbour oilskin jacket.
“It’s nice to meet you,” Robert said as he took a few steps toward the man and gently shook his cool and translucent hand.
“Sir Nicholas Eaton-Hardy at your service,” he said. “But please, call me Sir Nicholas.”
“You want me to call you Sir Nicholas?” Robert asked with a disbelieving chuckle. “Are you serious?”
“I think that’s only appropriate considering I was knighted by the Queen in 1988 for exceptional service to the crown for promoting London as a maritime center,” he said with a dramatic flair. “This is one of our country’s highest honors you know. It is the same one that was bestowed upon Sir Paul McCartney a few years ago.”
“Sir Nicholas it is,” Robert said as he reflexively fished around in his pocket for his BlackBerry.
As Robert began to withdraw the electronic device, Sir Nicholas jabbed his twisted wooden walking stick into Robert’s hand. The assault caused the American to fumble the machine back into his pocket and recoil with pain.
“What was that for?”
“The smarter the phone, the dumber the man who operates it becomes,” he said. “That little poke was to teach you some manners.”
“You call that good manners?” Robert laughed.
“Yes, and next time you whip that thing out I’ll jab you six inches to the left,” he threatened with a chummy wink of his rheumy eye.
“Would you care to tell me why?” Robert asked.
“It may be among the last of them, Mr. Fairchild, but ocean shipping is still a proper business of manners here in the City of London; ladies and gentlemen should not refer to their gadgets when they are having a conversation with another human being. In this business a person should look another person in the eye and listen to what they have to say.”
“Your country, your rules,” Robert said and smiled. “Thanks for taking the time to see me today, Sir Nicholas.”
Once the pain and surprise of Sir Nicholas’s nearly neutering assault had dis
sipated, Robert felt grateful to be exactly where he was. Between Mr. Cornelius Juhl, Captain Spyros Bouboulinas and Sir Nicholas Eaton-Hardy, he’d had the good luck to spend time in the company of several of the world’s greatest living shipping legends – men with nearly three hundred years of front-line shipping experience between them. Robert knew he had a lot to learn and he couldn’t ask for more experienced teachers.
“The pleasure is mine Mr. Fairchild. There isn’t a shipbroker in the world that isn’t tickled pink to meet an American investor these days,” he said.
“And why is that?” Robert asked.
“Because it seems as if American equity capital is behind the purchase of almost every modern vessel nowadays,” Sir Nicholas said and coughed violently into his a pocket square. “I never would have never thought it possible, but even the most traditional private shipowners seem to be working with large investment funds from your country.”
“I appreciate you sharing your insights,” Sir Nicholas said.
“Is this place your office?” Robert asked as he peered up at the photograph of stern-faced men long since deceased looking down at him.
“Unfortunately I was born one hundred years too late for that,” Sir Nicholas said. “My office is in a modern tower along the River Thames. This place is called the Baltic Exchange and it is where merchants and shipowners began coming together in 1744 to drink coffee, share the overseas newspapers and make charter parties for the carriage of goods by sea. I asked you to meet me here because I just finished a meeting upstairs.”
“The New York Stock Exchange started as a coffee house, too,” Robert said, unaware that he had just wandered into the place that was responsible for his discovery of shipping. A year and a half earlier Robert had accidentally typed BDI, shorthand for Baltic Dry Index, into Google instead of his stock quotation box on his Bloomberg – and the rest was history.
“Most of the world’s greatest endeavors began with a coffee and a handshake,” he said, pointing to a wooden plank into which four words were carved.
“Our word, our bond,” Robert read the words aloud.
Viking Raid Page 21